Beyond the Decree Understanding Third-Party Objections against Execution by Possession

Introduction

In the realm of civil litigation, the execution of a decree is a critical phase where the rights established by a court’s judgment are brought into reality. When a court grants a decree for possession, the decree-holder is entitled to enforce/execute the decree, typically by obtaining possession of the disputed property. However, the path to execution is not always straightforward. A significant challenge arises when a third-party, who was not a party to the original proceedings (that is, someone who was neither the plaintiff nor the defendant in a particular suit), objects to the execution on the grounds of having an independent right or title to the property in question.

This project explores the legal and judicial framework surrounding such third-party objections to the execution of decrees by way of granting possession to the decree-holder. It delves into the procedural intricacies that govern the rights and responsibilities of the decree-holder as well as the third-party, and the role of the courts in balancing these competing claims. The complexities of this issue are further compounded by the divergent opinions among various High Courts, leading to a lack of uniformity in how such objections are dealt with.

By analysing case law and statutory provisions, this project seeks to clarify the legal principles that guide the adjudication of third-party objections in execution proceedings. It also critically examines the judicial approaches taken by different High Courts and the Supreme Court, highlighting the implications of these differing views on the enforcement of decrees. Ultimately, this project aims to propose a more cohesive and just framework that ensures the effective execution of decrees while also safeguarding the legitimate rights of third parties.

Diverging opinions: High Courts

The legal framework governing third-party objections against the execution of the decree has evolved over a long period of time. By virtue of this, it has given rise to differences in interpretations across various High Courts in India. These courts have approached the issue with varied perspectives, reflecting the complexity of balancing the rights of third parties with the need to enforce judicial decrees efficiently and effectively.

While some High Courts have adopted a more restrictive approach, emphasising more upon the decree-holder’s right to possession and limiting the grounds on which third-party objections can be entertained, others have taken a broader stance, allowing greater consideration of third-party claims to ensure that all parties with a legitimate interest in the property are heard. This divergence in judicial thought has led to a lack of uniformity in how such objections are handled, creating a legal landscape where the outcome of similar cases can vary significantly depending on the jurisdiction. The author will explore these differing viewpoints, highlighting the key arguments and legal principles that have shaped the decisions of various High Courts on this matter.

Order 21 of the Civil Procedure Code, 1908¹ deals with the execution of decrees and orders. Rule 10² enables the decree-holder to apply to the court for execution of the decree and Rule 11 sub-rule (2)³ provides the particulars that must be incorporated in a written application for execution. Section 47 of the Code provides that all questions relating to the execution, discharge, or satisfaction of the decree that arise between the parties shall be determined by the executing court.⁴

In Ram Chandra Verma v. Manmal Singhi (hereafter, “Ram Verma case”)⁵, the question before the Sikkim High Court was whether the executing court could proceed without considering the objections raised by a third-party in possession of the decretal property, on the grounds that it is not bound by the decree. The executing court, from which the appeal lay before the High Court, ruled that since there was no express provision providing for an application by third-party to raise objections against the execution, the application was rejected. However, the Sikkim High Court heavily emphasised upon the violation of the principles of natural justice that would have occurred if the executing court’s view was taken to be right. The High Court interpreted Rule 35 of Order 21⁶ in order to remedy the perceived violation.

Rule 35 sub-rule (1) provides that:

Where a decree is for the delivery of any immovable property, possession thereof shall be delivered … by removing any person bound by the decree who refuses to vacate the property.⁷

The High Court interpreted the phrase “any person bound by the decree” to mean only the judgment-debtor and such other persons who claimed through the judgment-debtor. Accordingly, Rule 35 was not applicable to a third-party who was claiming a right/title over the decretal property independent of the judgment-debtor. Since the question of whether a third-party had an independent right could not be discerned without hearing the third-party, it was held by the High Court that in the interests of natural justice, a court would be bound to consider such objections under Rule 35.

While Ram Verma case⁸ provided the third-party power to apply to the executing court under Rule 35 to object to the execution, the Madhya Pradesh High Court, in Bhagwat Narayan Dwivedi v. Kasturi⁹, put the entire burden on the decree-holder. It was held that all that the third-party had to do was to inform the court that he was in possession of the decretal property on the basis of a right independent of the judgment-debtor and not at the latter’s instigation. If this was done, the entire burden would then shift to the decree-holder to prove that the objector is, in fact, a “person bound by the decree” under Rule 35. If the decree-holder failed in proving this, the executing court could not proceed with the execution until he filed an application under Order 21 Rule 97, complaining of such resistance or obstruction.¹⁰

The decision in Bhagwat Narayan¹¹ had severe implications. Firstly, it is one of the most fundamental principles of the law of evidence that that the burden of proving a fact lies upon the person who alleges the existence of such fact. However, the Court, in utter disregard, put the entire burden upon the decree-holder. The corollary to this is that the executing court would not be able to discern if the third-party actually had made a prima facie case or was simply acting at the instigation of the judgment-debtor, in order to unnecessarily prolong the execution of the decree. Secondly, since there is no limit prescribed to the number of third parties that can file an application objecting to the execution, the proceedings could go on ceaselessly. Thirdly, and most importantly, this view, coupled with Rule 103 of Order 21¹², which provides that any order made with respect to the resistance/obstruction shall have the force of a decree (that the provisions applicable generally to decrees will also apply in these cases), would mean that the stay on execution would continue until the final appeal has been extinguished. This would result in unreasonable agony to the decree-holder.

The highly problematic implications that the Bhagwat Narayan case¹³ would give rise to were duly noted and rectified by a Full Bench (3 Judges) in Usha Jain v. Manmohan Bajaj (hereafter, “Usha Jain”)¹⁴. In line with the dicta in Pandit Ramgulam Choubey v. Mahendra Kumar¹⁵, the M.P. High Court in Usha Jain¹⁶ clarified the legal position with respect to two provisions. Firstly, with respect to Rule 35, it held that no enquiry into the right of a third-party was contemplated thereunder upon his insistence. Secondly, it was held that Rule 97, which provided for an application by the decree-holder complaining of resistance/obstruction, was merely permissive/enabling in nature and not mandatory. It was only one of the two options available to the decree-holder; the second being that he could apply for a fresh warrant of possession.

Thus, Usha Jain case¹⁷ made it clear that the only two options available to the third-party were: one, to file an application only after being dispossessed of the suit property under Rule 99 of Order 21¹⁸, whereby the executing court is mandated to adjudicate upon its objections; or, two, file a fresh suit seeking a declaration of title. In both these cases, the third-party had to establish a prima facie right independent of the judgment-debtor, in order to secure a stay on the execution.¹⁹ In sum, the burden was put back on the third-party.

While the burden kept shifting with each decision, other approaches and reasons were being put forward in different High Courts. For instance, in Madanlal v. Hansraj²⁰, the Rajasthan High Court dealt with a third-party seeking adjudication of his claims under Rule 97. It held that one, an enquiry under Rule 97 was contemplated only at the instance of the decree-holder (meaning the third-party did not have the requisite locus standi), and two, that the only two remedies that the third-party had was to file an application under Rule 99 after being dispossessed or file a fresh civil suit. The overarching reason afforded was that had the legislature desired to include a provision allowing the third-party to maintain an application, it would have done so, or would have made it mandatory for the decree-holder to complain under Rule 97, in order for the former’s claim to be adjudicated upon.

An extended view was taken by the Calcutta High Court in Gopal Chandra Sadhukhan v. Sk. Jamsed²¹, wherein it was held that the following three classes of persons had no locus standi to apply for adjudication under Rule 97: one, a third-party claiming in good faith to be in possession of the property on his own account; or two, on account of a person other than the judgment-debtor; and three, a person claiming bona fide to have a right to be in such possession.²²

Law Commission’s recommendation

Taking note of the complexities surrounding third-party objections in the execution of decrees as well as the inconsistency in judicial interpretation and the serious implications potentially arising therefrom, the Law Commission of India, in 1992, in its 144th Report on “Conflicting Judicial Decisions Pertaining to the Civil Procedure Code, 1908”²³, made a recommendation, in line with the views of the Madhya Pradesh (Usha Jain)²⁴, Rajasthan and Calcutta High Courts, that an explanation be added to Rule 97 of Order 21 as follows:

Explanation.—Nothing in this rule shall be construed as enabling a purchaser who is not the decree-holder (or any person acting at the instance of such person) to apply under this rule.²⁵

The Law Commission underscored the importance of balancing the rights of decree-holders with the legitimate interests of third parties who were not part of the original proceedings but claim an independent right to the property. It sought to concretise the fact that it was only at the instance of the decree-holder that an application under Rule 97 has been contemplated, and that, as a corollary, the only options available to the third-party was to seek adjudication of its right post-dispossession under Rule 99, or file an independent civil suit. However, the legislature, hitherto has chosen not to implement this recommendation.

Supreme Court enters the fray

Following the Law Commission’s recommendations, the Supreme Court of India has played a pivotal role in shaping the legal landscape surrounding third-party objections. Through a series of landmark decisions, a few of which will be explored in this project, the Court has provided authoritative interpretations that provide clarity on the diverging perspectives discussed above. While these rulings have influenced lower court decision-making, they have also contributed to the complexity of the issue.

In Usha Jain case²⁶, the onus was put on the third-party to establish a prima facie case of an independent right either through an application post-dispossession under Rule 99 or by way of a fresh civil suit. However, this position was reversed by a two-Judge Bench of the Supreme Court in Shreenath v. Rajesh²⁷. The Supreme Court considered the question of whether a third-party could seek adjudication of its objections under Rule 97. Reading the phrase “resisted or obstructed by any person” in Rule 97(1) with “All questions … arising … on an application under Rule 97 or Rule 99 … shall be determined … not by a separate suit” in Rule 101 of Order 21²⁸, the Supreme Court held that all conflicts that arise between the decree-holder and a third-party in possession resisting the delivery of possession to the decree-holder have to be decided by the executing court itself.

Furthermore, it was held that while the third-party always had a right to file an application under Rule 99 after dispossession, this did not bar him from getting his claims adjudicated upon under Rule 97. Thus, the Supreme Court impliedly allowed third-party applications under Rule 97. The main reason guiding the dicta was to ensure that the third-party did not have to wait until he is removed from the decretal property in order for him to object. Reference was also made to another decision of the Supreme Court in Brahmdeo Chaudhary v. Rishikesh Prasad Jaiswal²⁹ (hereafter, “Brahmdeo Chaudhary”) which had the effect of transferring the burden back on to the decree-holder to file an application under Rule 97, once he came up against a third-party resisting the delivery of possession.

In that case, the decree-holder, upon being met with resistance by a third-party, instead of filing an application complaining of resistance under Rule 97, proceeded to seek a fresh warrant of possession, with the aid of police force, under Rule 35(3). The Supreme Court interpreted this application to be, in substance, an application under Rule 97, because of which it had to be adjudication upon, in consonance with the effect of a conjoint reading of Rules 97(2) and 101. In effect, it held that the executing court had circumscribed itself to a narrower jurisdiction that what was permitted by law.

While the Supreme Court’s intention of providing an avenue for adjudication of legitimate third-party objections is welcome, creating a power under Rule 97 for the objector to apply has clearly not been contemplated by the provisions, either expressly or in spirit. Rule 97(1) provides (only) for the decree-holder to make an application thereunder. Even interpreting the phrase “resisted or obstructed by any person” in the broadest of broad terms does not contemplate giving the power to a third-party to file an application seeking adjudication. Further, Rule 97(2) refers only to the application made by the decree-holder under sub-rule (1) Additionally, if one refers to Form 40 of Appendix E of the Code³⁰, it is clear that the only party that has the power to apply under Rule 97 is the decree-holder. This is clearly from the initial phrases of the form:

Whereas …, the decree-holder in the above suit, has complained to this Court that you have resisted … You are hereby summoned to appear in this Court….³¹

Nonetheless, the position in Shreenath³² and Brahmdeo Chaudhary³³ case is good law. The Supreme Court reiterated these principles in Asgar v. Mohan Varma³⁴, wherein it was additionally held that the sole remedy for all disputes between the decree-holder and the third-party was contained in Order 21 Rules 97 to 101³⁵. Further, in both Jini Dhanrajgir v. Shibu Mathew³⁶, as well as Ved Kumari v. MCD³⁷, it was held that the exclusive jurisdiction conferred upon the executing court under Section 47 of the Code was meant to provide for expedient disposing of third-party contestations against the decree-holder.

Suggestions

It is now clear that the only avenue available to the decree-holder to complain of resistance is an application under Rule 97 of Order 21. This is made clear by the fact that Section 47 of the Code read with Rule 101 provide that all issues arising between the decree-holder and the third-party be adjudicated upon by the executing court itself, and not by way of a separate suit.

However, I believe that changes need to be made with respect to the avenues available to third parties. While the current position, as provided for by the Supreme Court in Shreenath case³⁸, is that the third-party can file an application under Rule 97 itself, I believe this to be a gross misinterpretation of Rule 97. As I have argued above, the language of Rule 97 makes it clear that the only party that the legislature has contemplated is the decree-holder. If third parties are allowed to file applications under Rule 97(1), there is immense risk of the decree-holder not being able to enjoy the fruits of the decree. This is because Rule 97(2) binds the executing court to adjudicate upon applications made under Rule 97(1).

Thus, it is suggested that the avenue for the third-party be created under Rule 35(3) of Order 21, instead of Rule 97(1). This can be done for two reasons: firstly, as was held by the Sikkim High Court in Ram Chandra Verma case³⁹, the phrase “any person bound by the decree” only includes the judgment-debtor and those other individuals claiming through the judgment-debtor. There is no default inclusion of a third-party within that phrase. Secondly, this suggestion is in consonance with the principles of natural justice, that require that no party be condemned unheard.

Additionally, the most significant change that can bring about a positive impact in these disputes is to cast the burden, initially, upon the third-party. A provision that mandates the third-party to provide, at the first instance of appearance before the executing court, all evidence it has in favour of its claim of a right/title to the decretal property independent of the judgment-debtor, must be introduced. No leniency must be granted in terms of repeated adjournment of hearings, or giving time to the third-party to produce a document that it supposedly does not have in its possession at that stage. Lastly, the executing court must refuse to grant a stay on the execution of the decree until the third-party (objector) has made a prima facie case, reasonably satisfying it of its independent right/title. It is only then that it should call upon the decree-holder to reply to the third-party’s claim. It is suggested that the same procedure be followed even in cases where the decree-holder himself/herself files an application complaining of obstruction/resistance under Rule 97.

Conclusion

As far back as in 1871-1872, the Privy Council had acknowledged and regretted the ceaseless and prolonging nature of third-party objections to execution of property decrees in General Manager of the Raj Durbhunga v. Maharajah Coomar Ramaput Sing⁴⁰. It was noted that the difficulties of litigants began in India once they had obtained a decree. Similarly, in Kuer Jang Bahadur v. Bank of Upper India Ltd.⁴¹, it was held that:

2. … Courts in India haveto be careful to see that the process of the Court and the laws of procedure were not abused by judgment-debtors in such a way as to make the courts of law instrumental in defrauding decree-holders, who had obtained decrees in accordance with their rights.⁴²

In this project, I have explored the varying interpretations by different High Courts regarding third-party objections in the execution of decrees, highlighting the inconsistencies in their approaches. I have also discussed and critically analysed Supreme Court decisions with an aim to provide a more comprehensive understanding as to the current position of law. However, notwithstanding the Supreme Court’s dicta that the Code is sufficiently armed to deal with all kinds of scenarios, I believe there still exist gaps that need to be bridged to achieve a balanced and just legal framework.

The goal of this project is to suggest a clearer and fairer way to balance the rights of the decree-holder with those of the third-party, ensuring that justice is served for everyone involved. What must be sought is a balance between the decree-holders’ rights to enforce the decree and legitimate third-party claims.